EAA/ANN AirVenture Innovation Preview

Say Concerns About Competition, National Security Must Be
Addressed

The
Allied Pilots Association (APA), representing 12,000 pilots of
American Airlines, asked the federal government Wednesday to defer
any ruling on American Airlines’ application for antitrust
exemption to allow for a full examination of related national
security, competitiveness and outsourcing issues.

As ANN reported, American Airlines, British
Airways, Iberia, Finnair and Royal Jordanian recently filed an
application for worldwide antitrust immunity and are seeking rapid
approval of their application. In a related development, American
Airlines also announced it had reached a "joint business agreement"
with British Airways and Iberia.

APA President Captain Lloyd Hill said lawmakers need to
carefully consider the implications of such a deal going
forward.

"Given the complexity of these proposed agreements, the many
unknowns associated with them and other important considerations,
we strongly recommend that any decision be deferred until a
thorough analysis can be conducted," said Hill. "APA has major
job-security concerns relative to what American Airlines is
attempting to do, while other interested parties have voiced
meaningful opposition to reduced competition among carriers. There
simply isn’t time for the federal government to conduct an
appropriately thorough investigation in a matter of weeks, as
American Airlines management has advocated."

Hill also pointed out the government depends upon US airlines to
carry troops and supplies in wartime as the nation's Civil Reserve
Air Fleet. "APA questions the wisdom of permitting national
strategic-interest companies such as airlines to engage in what
amounts to a virtual merger with foreign counterparts," he said. "I
do not believe anyone fully understands the potential
national-security ramifications of such a step."

Hill also expressed APA's concerns over the potential
outsourcing of more American jobs.

"As we have seen in the takeover of freight carrier Airborne
Express by German company DHL with 8,000 Ohio workers now losing
their jobs, international deals like this can have extremely
adverse consequences for American workers," he said.

In addition, Hill pointed out that APA’s current
collective bargaining agreement precludes any joint business
agreement between American Airlines and another carrier. The
contract’s "Scope" clause explicitly states that, "All flying
performed by or on behalf of the Company or an Affiliate shall be
performed by pilots on the American Airlines Pilots Seniority
List." The clause does contain a series of exceptions for
code-sharing agreements, commuter affiliate operations and other
situations, but does not include any exception for a joint business
agreement.

"Thus far American Airlines management has not negotiated any
agreement with APA that would permit the airline to enter into a
joint venture with British Airways and Iberia, which we firmly
believe is a prerequisite," Hill said.

In a letter this week to the CEOs of British Airways and Iberia,
Hill questioned the advisability of entering into a joint business
agreement with American Airlines at this juncture. He emphasized to
the executives that APA has been rebuffed in its efforts to work
with American Airlines management to address the airline’s
widely reported operational shortfalls. He also noted that
management has permitted pilot staffing levels at American Airlines
to fall below a specific contractual benchmark, triggering a
provision that will soon enable APA to terminate the Scope
exception that allows the company to utilize commuter air carriers
in their system. In addition, Hill noted the absence of any
contractual language permitting management to proceed with the
joint business agreement.